Ed Miliband warns that NHS faces financial bombshell

Ed Miliband warned that two-thirds of hospital trusts face having to make “swingeing cuts” after a leaked internal document showed that the health service is projected to run a deficit of nearly £2bn this year.

With Labour campaigning hard to make the NHS the dominant issue of the final days of the campaign, the party released a document which revealed that the overall projected financial shortfall across 98 of England’s hospital trusts amounted to £759m.

Miliband said the trust-by-trust figures revealed the full scale of “the financial bombshell” facing the NHS, with two-thirds of hospital trusts projected to run a deficit in this financial year.

If the figure was extrapolated across all England’s 240 trusts, that would amount to the equivalent of a financial deficit of £1.86bn.

The leaked paper was prepared by NHS Providers, an association of health service trusts, and circulated last week. It appears to confirm previously broad projections on the unprecedented scale of the financial squeeze on the NHS this year. A total of 34 trusts are projecting deficits of £8m with 14 trusts fearing deficits of more than £20m.

Miliband said the figures represented the clearest detail yet of the pressures facing the health service.

He said: “Two-thirds of hospitals face having to make swingeing cuts, not at some point in the future but this year because of a cash crisis made in Downing Street.”

The analysis shows that two-thirds of trusts expect to be in deficit in 2015-16 – up from just one in five in 2013-14. The scale of the projected deficit has also tripled since last year: the total deficit for the 98 trusts surveyed is projected to be more than £750m in 2015-16 – up from a deficit of £250m in 2014-15 and compared with a surplus of £100m in 2013-14.

This equates to an average deficit of £7.7m in 2015-16, compared with an average surplus of £1m in 2013-14.

The NHS will not publish its final accounts for 2014-15 until after Thursday’s general election, but George Osborne, the chancellor, announced a further £2bn in funding for the health service for 2015-16 in last year’s autumn statement. NHS hospitals argue that less than half of that is new money, while the remainder is earmarked for spending on services outside hospitals.

The chair of NHS Providers, Chris Hopson, warned last month of “a real danger that the strategic deterioration [in NHS finances] could speed up and get out of control”.

He added that “25 really big trusts, almost all of whom were in surplus [until recently], will flip over into deficit next year”. He highlighted the last three months of 2015 as the time when trusts’ finances would come under the most pressure.

Many trusts, including foundation trusts, which are semi-independent of NHS control and are meant to have strong finances, have been spending reserves to stay in the black but are about to run out of money, Hopson said.

The new figures reveal that a further urgent cash injection will be required, regardless of the government elected on Thursday. All parties have made promises to boost funding for the NHS. Labour has pledged to introduce a £2.5bn a year Time to Care fund to boost provision , while the Conservatives said they would ringfence NHS spending to ensure its budgets rose in line with inflation.

Sir David Nicholson, the head of the NHS until a year ago, warned last month that the scale of the financial problems in the health service would become “crystal clear” by the autumn.

The latest financial projections come as a separate report from the Economist Intelligence Unit shows the NHS has fewer doctors, nurses, hospital beds and vital equipment such as scanners than most of the world’s other wealthy nations.

The unit says shortages of key medical staff have worrying implications for patients’ chances of making a good recovery from conditions such as cancer, heart attacks and strokes.

It concludes that the health service is lagging behind its equivalents in almost all the other 29 rich nations which it examined in depth. It links that to the fact that, out of 30 OECD countries it studied, the UK ranks 27th out of 30 in terms of how many resources each healthcare system has to provide care.

“The UK is not a particularly generous spender on healthcare but, when it comes to concrete resources, it fares even worse,” the report concludes. It shows that the NHS, despite receiving real-terms annual funding increases under the coalition, has:

• 2.8 doctors per 10,000 people, compared with the OECD average of 3.2.

• 8.2 nurses per 10,000 people, when the OECD average is 8.9.

• 2.8 hospital beds per 1,000 people against an OECD average of 4.8.

• 6.8 computerised tomography scanners per million people, which is less than half the OECD average.

• 8.7 magnetic resonance imaging units, again less than half the average.

The findings sparked renewed debate about what the next government will need to do to tackle chronic understaffing of many types of healthcare professionals and the growing calls for the NHS to receive extra billions in funding to help cope with the ageing and growing population and the rising number of people with long-term conditions.

Dr Mark Porter, the chairman of the British Medical Association, the doctors’ union, said the findings would not surprise anyone working in an increasingly under-pressure NHS.

“This study once again highlights the stark reality of the pressures facing the NHS and the effect that this is having on patients. It exposes the outlandish and unrealistic election pledges made by politicians of all parties,” said Porter.

The Economist Intelligence Unit said the UK spends the 16th largest amount on healthcare out of the 30 countries, which includes spending on private care. It suggested that the low ranking means the NHS is not getting enough value for money.

While ranking the NHS third overall for equity of access to care, because it treats according to need rather than ability to pay, it also flagged up poorer life expectancy and worse cancer mortality rates compared with many other OECD countries.